XML 38 R22.htm IDEA: XBRL DOCUMENT

Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 16:-

SUBSEQUENT EVENTS

The Cosmos Transaction:

On December 30, 2020, the Company entered into the Bid Agreement with Cosmos, which was subsequently amended on January 18, 2021 for the primary purpose of simplifying the Offer structure. Under the Bid Agreement (as amended), the parties agreed that the Company would commence the Offer, an off-market takeover offer under applicable Australian laws, to acquire all of the Cosmos Shares in exchange for 61.11 Company's shares of common stock for each Cosmos Share, being the Offer Consideration.

Under the Bid Agreement, 22.33 Company shares of common stock out of the Offer Consideration will be "Restricted Stock" subject to a Stock Restriction Agreement to be entered into at the Closing Date and 38.78 Company shares of common stock will be "Covered Securities". A Cosmos shareholder who accepts the Offer (an "Accepting Shareholder") will not be permitted to sell or encumber their Restricted Stock until December 31, 2021 (the "Milestone Date"). In addition, an Accepting Shareholders may not exercise voting rights in respect of Restricted Stock from the date of issuance of the Offer Consideration until the Milestone Date. An Accepting Shareholder is entitled to sell or encumber its Covered Securities. However, if (subject to certain limited exceptions) an Accepting Shareholder sells or encumbers any of its Covered Securities before the Milestone Date, the Company has an option to repurchase a pro rata proportion of the Restricted Stock for the lower of $0.0001 and the fair market value of the Restricted Stock. The Restricted Stock (and any dividends thereon) will be held by the Company in escrow for the Accepting Shareholder's benefit until such time as the Restricted Stock is repurchased by Wize or all restrictions thereon lapse. If any Restricted Stock is repurchased under the Company's repurchase option, a pro rata proportion of the dividend on the Restricted Stock shall be retained by the Company.

Immediately following the Closing Date, and assuming all of the holders of Cosmos Shares accept the Offer, Cosmos shareholders are expected to own approximately 87.65% of the outstanding common stock of the Company, while the Company's existing stockholders are expected to remain the owners of approximately 10.75% of the outstanding common stock of the Company, each on a fully diluted basis and including warrants to be issued to the Company's financial advisor to the transaction.

Pursuant to the Bid Agreement, prior to the Closing Date, the Company will enter into a Contingent Value Rights Agreement (the "CVR Agreement") with Cosmos, certain of the Company's subsidiaries (the "Wize Subsidiaries"), a person designated by the Company prior to the Closing Date as the Holders' Representative (as defined herein), and the Rights Agent (as defined therein). Pursuant to the CVR Agreement, at the Closing Date, each Wize pre-Closing security holder will receive one non-transferable CVR for each outstanding share of common stock of the Company and for each share of common stock of the Company underlying other convertible securities and warrants, held as of 4:01 p.m. Eastern Time on the day immediately before the Effective Time (as defined in the CVR Agreement). Each CVR will represent the right to receive a pro rata share of any consideration that may be received by the Company or the Company Subsidiaries in connection with the Company's existing LO2A business. In particular, CVR holders will be entitled to any consideration (whether cash, stock, assets or otherwise) that the Company or the Company Subsidiaries (or any of its Affiliates or shareholders) receives in connection with an LO2A Transaction, which, as defined in the CVR Agreement, includes (i) a sale of any of the Company Subsidiaries to a third party and/or (ii) the partnering, licensing, sublicensing, distribution, reselling or sale of all or any part of the LO2A Technology or LO2A Products to a third party, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 that the Company Subsidiaries undertook to incur in the development of the LO2A Technology at the request of the Holders' Representative.

The Bid Agreement also contains certain covenants to be performed at or following the Closing Date, including, among others, (i) agreement that the Board of Directors of the Company immediately following the Closing Date will consist, subject to certain exceptions, of three members to be designated by Cosmos and one member to be designated by the Company; (ii) covenants that the Company will seek, following the Closing Date, stockholder approval to be renamed Cosmos Capital, Inc. (or similar name), and to effect a reverse share split of the Company's common stock; (iii) covenants that the Company will establish an incentive compensation program with respect to 40,000,000 shares of its common stock, to be granted promptly following the Closing Date, in the form of performance-based RSUs, performance rights or indeterminate rights based on the performance milestone criteria and allocation set in the Bid Agreement (the "Post-Closing Incentive Plan"), 50% of which are to be granted to personnel specified by the Company prior to the Closing Date and the remainder to be granted to personnel of Cosmos (see also Item 9B below); (iv) an obligation by the Company to terminate or procure the termination of each of the current employment or consulting agreements of the Company with Mr. Mark Sieczkarek, the Chairman of the Company Board of Directors, Mr. Noam Danenberg, the Chief Executive Officer of the Company, Mr. Or Eisenberg, the Chief Financial Officer of the Company, and another part-time employee related to Mr. Danenberg; and (v) an obligation by the Company to use its reasonable commercial efforts to enter into new, part time, consulting agreements with Mr. Danenberg and Mr. Eisenberg in a form to be agreed between the Company and Cosmos. In this respect, it should be noted that the Company, Cosmos and each of Mr. Danenberg and Mr. Eisenberg agreed on the form of such consulting agreements, whereby Mr. Danenberg and Mr. Eisenberg will provide part time consulting services to the Company following the Closing Date for monthly compensation of US$10,000 and US$7,500, respectively.

Concurrently with the execution of the Bid Agreement, the Company entered into Securities Purchase Agreements (the "PIPE Agreements") with certain accredited investors (the "PIPE Investors"), including Mr. Noam Danenberg, our CEO. Pursuant to the PIPE Agreements, we agreed to sell to the PIPE Investors, and the PIPE Investors agreed to purchase from us, in a private placement, an aggregate of 25,000,000 shares of common stock for a purchase price of $0.12 per share, or aggregate gross proceeds of $3.0 million, which, in the case of Mr. Danenberg, may be satisfied by waiving outstanding amounts owed by the Company or its subsidiaries to Mr. Danenberg pursuant to his consulting agreement with our subsidiary.

On February 1, 2021, we lodged a Bidder's Statement with the Australian Securities and Investments Commission to commence the Offer.

On February 15, 2021, Cosmos informed the Company that Cosmos completed the issuance of convertible notes (the "Cosmos Convertible Notes") with an aggregate principal amount of approximately US$21 million to several non-U.S. sophisticated or professional investors (the "Purchasers"). The Cosmos Convertible Notes are unsecured and shall initially be convertible into shares of Cosmos at a conversion price of AU$23.58 per share (equivalent to US$18.16), reflecting a pre-money valuation of Cosmos of approximately US$185 million. The Cosmos Convertible Notes will automatically convert to shares six months after the date of issuance. Cosmos is obligated to pay interest to the Purchasers on the outstanding principal amount of the Cosmos Convertible Notes at the rate of 8% per annum, payable on the conversion date, in cash or, at Cosmos' option, in shares of Cosmos. Redemption of the Cosmos Convertible Notes occurs only if an insolvency event occurs in respect of Cosmos.

The Cosmos Convertible Notes also provide that, subject to, among other things, the consummation of the Offer before May 31, 2021, Cosmos will cause the Company to assume the Cosmos Convertible Notes by way of entering into an amended and restate convertible note on substantially the same terms as the Cosmos Convertible Note (the "Wize Convertible Notes"), except that, at such time, they shall be convertible, upon the earlier of six (6) months from the issuance of the Cosmos Convertible Notes and an uplisting of the common stock of the Company to Nasdaq, into shares of common stock of the Company at a conversion price of US$0.339 per share.

Cosmos plans to use the proceeds of the Cosmos Convertible Notes for the purchase of additional application-specific integrated circuit (ASIC) mining hardware, modular data centers, associated infrastructure and capital raising costs.

February 16, 2021, we announced that the Offer became unconditional and that we plan to consummate the transactions contemplated by the Bid Agreement and the Offer on or about March 9, 2021.